Week Ending 11/11/2022


A big week for stocks worldwide as the inflation report came in slightly less than the consensus estimate. US markets were up by 5.94%, international stocks increased by 6.73%, and bonds rallied by 2.30% on lower interest rates. The October consumer price index was up by 7.7% compared to last year, below the estimate of 8%, and lower than the September print of 8.2%. Investors also will get a split government, as it looks like the House will slide just barely to the Republicans, and the Democrats will keep the Senate. That formula has generally worked out well for investors.

But the Republicans certainly were not happy with that outcome. It was a big underperformance given all the cards stacked up in their favor. At some point, the Republicans have to finally get the message, that Trump has been a disaster for their electoral hopes since he was elected back in 2016. In the 2018 mid-terms, despite a strong economy, the GOP lost 41 house seats. He lost the 2020 presidential election. When it was discovered that he was pressuring state officials in Georgia to turn the vote in his favor, his actions probably cost the GOP the Senate runoff. And then this past week, most of his endorsed candidates failed miserably in elections that would have been winnable with normal, sane candidates. Despite high inflation, high mortgage rates, the threat of a recession, and an unpopular President, it looks like the Democrats will only lose about 11 House seats, and they held on to the Senate, in what should have been a big year for the Republicans.

The Crypto world continues to fall apart. In an incredible turnaround from King of the block (chain) to bankruptcy, FTX disintegrated in five days, and CEO Sam Bankman-Fried, who was doing a good white knight impersonation of JP Morgan from 1907 just a few months ago, went from a net worth of $25 billion to $0 in a flash. So far the crash hasn’t spilled over into the traditional financial markets but time will tell.